As N.J. leaves RGGI, study says program added 1.6B to region’s economy

As New Jersey prepares to leave the Regional Greenhouse Gas Initiative at year’s end, a new report suggests the cap-and-trade program has had an overall positive economic impact on the Garden State and the region.

As New Jersey prepares to leave the Regional Greenhouse Gas Initiative at year’s end, a new report suggests the cap-and-trade program has had an overall positive economic impact on the Garden State and the region.

The report covers the first three years of the 10-state greenhouse gas-reduction pact. It was released by the National Association of Regulatory Utility Commissioners and conducted by the Boston-based consulting firm Analysis Group.

From mid-2008 through September, power plant owners in the RGGI region have spent about $912 million to buy carbon dioxide emission permits at auction, but the report found the program has added about $1.6 billion in economic value to the region.

Paul Hibbard, a vice president at Analysis Group, said the report dealt solely with the economic impact, and did not attempt to rate the program on its pollution-reduction goals.

In announcing New Jersey’s pullout in May, Gov. Chris Christie said a Department of Environmental Protection analysis found the program wasn’t effective at lowering emissions. He said the pollution permit system amounts to a tax, which he said could result in clean New Jersey plants being forced to close and be replaced by dirtier Pennsylvania coal-powered plants. Pennsylvania is not a member of RGGI.

“Under Governor Christie, New Jersey has become a nationally recognized leader in the development of renewable energy. In addition, New Jersey is aggressively promoting energy efficiency and conservation, and is a key player in the regional effort to develop infrastructure needed to encourage the use of electric and alternative-fuel vehicles,” said DEP spokesman Lawrence Hajna in a release. “These are real-world initiatives creating economic growth and jobs, improving air quality and reducing greenhouse emissions.

The money paid by power plants was distributed to the member states, which could spend the money however they wished.

New Jersey received about $118 million over the three years, and put 63 percent — about $75 million — into the state’s general fund.

The report found that spending the money on energy-efficiency programs yielded the highest economic impact.

Susan Tierney, a managing principal at Analysis Group, said energy-efficiency programs yield economic benefits from direct program spending, but also by driving down energy demand, thus lowering prices.

“The value of customers’ bills going down also has trickle effects in the economy, so energy efficiency really is this twofer, compared to other” spending categories, she said.

The report said based on funding from the RGGI pollution permit auctions to date, customers stand to gain nearly $1.3 billion in lower electricity, natural gas and heating oil bills over the next decade.